Worldwide Executive Job Search Solutions, LLC: Stipulated Order … · CRAIG NICHOLAS CHREST,...

United States District CourtSouthern District of Texas

ENTEREDOctober 08, 2019

David J. Bradley, Clerk

Case 4:19-cv-00495 Document 34 Filed on 10/07/19 in TXSD of 31'

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHER!'" DISTRICT OF TEXAS

HOUSTON DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

WORLDWIDE EXECUTIVE JOB SEARClfI SOLUTIONS, LLC, a limited liability company, also d/b/a WWEJSS, Seven Figure Careers, 7FigRecruiters, 7FC, Finnburg Switzer, ResumeterPro, Creating Job Opportunity, Confidential Jobs Only, CJOnly, and CJO Private Equity,

PRIV ATEEQUITYHEADHUNTERS.COM, LLC, a limited liability company, also d/b/a Private Equity Headhunters, PE Headhunters, and PEHHS.COM, LLC,

and

CRAIG NICHOLAS CHREST, individually and as a managing member of Worldwide Executive Job Search Solutions, LLC,

Defendants.

Civil Action No. 4:19-cv-00495

STIPULATED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT

Plaintiff, Federal Trade Commission (Commission), filed its Complaint for Permanent

Injunction and Other Equitable Relief (Complaint), for a permanent injunction, and other

equitable relief in this matter, pursuant to Sectio 1s 13(b) and 19 of the Federal Trade

Commission Act (FTC Act), 15 U.S.C. §§ 53(b) and 57b, and the Telemarketing and Consumer

Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6101-6108. The Commission and Defendants

Case 4:19-cv-00495 Document 34 Filed on 10/07/19 in TXSD of 31

stipulate to the entry of this Stipulated Order for Permanent Injunction and Monetary Judgment

(Order) to resolve all matters in dispute in this a,~tion between them.

THEREFORE, IT IS ORDERED as follows:

FINIJiINGS

1. This Court has jurisdiction over this matter.

2. The Complaint charges that Defendants participated in deceptive acts or practices in

violation of Section 5 of the FTC Act, 15 U.S.C. § 45, and the Commission's Telemarketing

Sales Rule, 16 C.F .R. Part 3 I 0, in connection with the advertising, marketing, promotion,

offering for sale, or the sale of job placement and resume repair services.

3. Defendants neither admit nor deny any of the allegations in the Complaint, except as

specifically stated in this Order. Only for purposes of this action, Defendants admit the facts

necessary to establish jurisdiction.

4. Defendants waive any claim that they may have under the Equal Access to Justice Act,

28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and

agree to bear their own costs and attorney fees.

5. Defendants and the Commission waive all rights to appeal or otherwise challenge or

contest the validity of this Order.

DEFINlTIONS

For the purpose of this Order, the following definitions apply:

A. "Defendants" means the Individual Defendant and the Corporate Defendants,

individually, collectively, or in any combination.

1. "Corporate Defendants" means (a) Worldwide Executive Job Search Solutions,

LLC, and (b) PrivateEquityHeadhunters.;:om, LLC, and their successors and assigns.


2. "Individual Defendant" means Craig Nicholas Chrest.

B. "Covered Communication" means a written, oral, or Pictorial review, performance

assessment, or other similar analysis, including by electronic means, of goods, services, or

conduct.

C. "Employment Related Services" mean:; any program, plan, good or service that is(])

offered for a fee or other monetary consideration, and (2) represented, expressly or by

implication to: (a) identify a prospective or potential employer, job opening, or job posting for a

job applicant; (b) arrange on behalf of a job applicant to send or submit a job application or

resume to a prospective or potential employer, job opening, or job posting; ( c) speak with, meet

or communicate, by email or other means, any prospective or potential employer; (d) arrange for

a job applicant to speak with, meet or communicate, by email or other means, any prospective or

potential employer; (e) review a job applicant's ·esume for any purpose, including but not

limited to, reading, critiquing, editing, or improYing a resume, whether through an electronic or

online means, or by fax or in person.

D. "Pictorial" includes pictures, photographs, video, illustrations, and symbols.

E. "Prohibited Contract Provision" meam a contract provision used in the course of

selling or leasing goods or services that:

1. prohibits or restricts the ability of a person who is a party to the contract to

engage in a Covered Communication;

2. imposes a penalty or fee agains: a person who is a party to the contract for

engaging in a Covered Commu1ication; or

3. transfers, or requires a person who is a party to the contract to transfer, to any

other person any intellectual property rights in a Covered Communication, with

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the exception of a non-exclusive license to lawfully use a Covered

Communication about a Defendant's goods, services, or conduct.

F. "Telemarketing" means any plan, program, or campaign which is conducted to induce

the purchase of any good or service by use of one or more telephones, and which involves a

telephone call, whether or not covered by the Telemarketing Sales Rule.

ORDER

I. BAN ON EMPLOYMENT RELATED SERVICES

IT IS ORDERED that Defendants are pe:manently restrained and enjoined from

advertising, marketing, promoting, or offering for sale, or assisting in the advertising, marketing,

promoting, or offering for sale of, any Employment Related Services. Provided however, that

this Section does not apply to (l) the Corporate Defendants' hiring of their own employees, (2)

the Individual Defendant's personal job searchei: or hiring his own employees, or (3) any activity

by the Individual Defendant taken to assist his employer in hiring employees for employment

with the Individual Defendant's employer.

II. PROHIBITION AGAINST MISREPRESENTATIONS

IT IS FURTHER ORDERED that Defenfants, Defendants' officers, agents, employees,

and attorneys, and all other persons in active cor cert or participation with any of them, who

receive actual notice of this Order, whether actir g directly or indirectly, in connection with

advertising, marketing, promoting, or offering for sale any good or service, are permanently

restrained and enjoined from misrepresenting, or assisting others in misrepresenting, expressly or

by implication, any fact material to consumers c,)ncerning any good or service, such as: the total

costs; any material restrictions, limitations, or crnditions; or any material aspect of its

performance, efficacy, nature, or central characteristics.


III. PROHIBITION AGAINST VIOLATING THE TELEMARKETING SALES RULE

IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees,

and attorneys, and all other persons in active concert or participation with any of them, who

receive actual notice of this Order, whether acting directly or indirectly, in connection with

Telemarketing are permanently restrained and enjoined from engaging in, causing others to

engage in, or assisting others engaging in any of the following practices:

A. Misrepresenting, or assisting others in misrepresenting, expressly or by implication, any

material aspect of the performance, efficacy, nature or other characteristic of any goods or

services that are the subject of a Telemarketing i,ales offer; or

B. Violating the Telemarketing Sales Rule, 16 C.F.R. Part 310, a copy of which is attached

to this Order as Attachment A.

IV. INJUNCTION AGAINST SUPPRESSING COVERED COMMUNICATIONS 1LHROUGH PROHIBITED

CONTRACT PROVISIONS

IT IS FURTHER ORDERED that Defenjants, Defendants' officers, agents, employees,

and attorneys, and all other persons in active car.cert or participation with any of them, who

receive actual notice of this Order, whether actir g directly or indirectly, are hereby permanently

restrained and enjoined from offering, attemptin 5 to enforce, or asserting the validity of, any

Prohibited Contract Provision.


V. MONETARY JUDGMENT AND PARTIAL SUSPENSION

IT IS FURTHER ORDERED that:

A. Judgment in the amount of One Million, Seven Hundred Forty-Four Thousand Four

Hundred and Twenty-Two Dollars ($1,744,422.00) is entered in favor of the Commission against

the Individual Defendant and Corporate Defendants, jointly and severally, as equitable monetary

relief.

B. Defendants are ordered to pay to the Commission Eighteen Thousand Dollars

($18,000.00). Such payment must be made within 10 days of entry of this Order by electronic

fund transfer in accordance with instructions to be provided by a representative of the

Commission. Upon such payment, the remainder of the judgment is suspended, subject to the

Subsections below.

C. The Commission's agreement to the suspension of part of the judgment is expressly

premised upon the truthfulness, accuracy, and completeness of Defendants' sworn financial

statements and related documents (collectively, "financial attestations") submitted to the

Commission, namely:

I. the Financial Statement oflndividual Defendant Craig Nicholas Chrest signed on

March 12, 2019, including the attachments (Chrest #000807-001609);

2. the Financial Statement of Corpo:·ate Defendant Worldwide Executive Job Search

Solutions, LLC signed by Craig Nicholas Chrest as President, CEO, and Owner on April 8, 2019,

including the attachments (Chrest #000807-001609);

3. the Financial Statement of Corporate Defendant PrivateEquityHeadhunters.com,

LLC signed by Craig Nicholas Chrest as President, CEO, and Owner on April 8, 2019, including

the attachments (Chrest #000807-001609);


4. two Excel spreadsheets submitted by Defendants to the FTC by secure file

transfer protocol email on May 8, 2019, identified as electronic files entitled ''Copy of Totals of

New Business 2015 .xlsx" and "2018 2019 Cash __ protected.xlsx"; and

5. the additional documentation signed by Individual Defendant, Craig Nicholas

Chrest, on May 24, 2019, and transmitted to the FTC by email on May 30, 20 I 9, including two

electronic files entitled: "Chrest Current Financi:il Picture_updated 2019.05.24.pdf' and "cfisd

paystub."

D. The suspension of the judgment will be lifted as to any Defendant if, upon motion by the

Commission, the Court finds that Defendant fail~d to disclose any material asset, materially

misstated the value of any asset, or made any other material misstatement or omission in the

financial attestations identified above.

E. If the suspension of the judgment is lifted, the judgment becomes immediately due as to

that Defendant in the amount specified in Subsection A. above, which the parties stipulate only

for purposes of this Section represents the consumer injury alleged in the Complaint, less any

payment previously made pursuant to this Sectirn, plus interest computed from the date of entry

of this Order.

VI. ADDITIONAL MONETARY PROVISIONS

IT IS FURTHER ORDERED that:

A. Defendants relinquish dominion and all legal and equitable right, title, and interest in all

assets transferred pursuant to this Order and may not seek the return of any assets.

B. The facts alleged in the Complaint will be taken as true, without further proof, in any

subsequent civil litigation by or on behalf of the Commission, including in a proceeding to

7


enforce its rights to any payment or monetary jujgment pursuant to this Order, such as a

nondischargeability complaint in any bankruptc:1 case.

C. The facts alleged in the Complaint establish all elements necessary to sustain an action by

the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C.

§ 523(a)(2)(A), and this Order will have collateral estoppel effect for such purposes.

D. Defendants acknowledge that their Taxpayer Identification Numbers (Social Security

Numbers or Employer Identification Numbers), which Defendants previously submitted to the

Commission, may be used for collecting and reporting on any delinquent amount arising out of

this Order, in accordance with 31 U.S.C. § 7701.

E. All money paid to the Commission pursuant to this Order may be deposited into a fund

administered by the Commission or its designee to be used for equitable relief, including

consumer redress and any attendant expenses for the administration of any redress fund. If a

representative of the Commission decides that d rect redress to consumers is wholly or partially

impracticable or money remains after redress is ,;ompleted, the Commission may apply any

remaining money for such other equitable relief (including consumer information remedies) as it

determines to be reasonably related to Defendants' practices alleged in the Complaint. Any

money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement.

Defendants have no right to challenge any actions the Commission or its representatives may

take pursuant to this Subsection.

F. Upon entry of this Judgment, the asset fo~eze imposed by the February 22, 2019 Agreed

Temporary Restraining Order (Dkt. 18) and con1 inued by the March 25, 2019 Agreed

Preliminary Injunction (Dkt. 21) is modified to permit the payments identified in Paragraph B of

Section V of this Order. Upon completion of those payments, the asset freeze is dissolved.


VII. CUSTOMER INFORMATION

IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees,

and attorneys, and all other persons in active concert or participation with any of them, who

receive actual notice of this Order, are permanertly restrained and enjoined from directly or

indirectly:

A. Failing to provide sufficient customer information to enable the Commission to

efficiently administer consumer redress. Defend;mts represent that they have provided this

redress information to the Commission. If a representative of the Commission requests in writing

any information related to redress, Defendants must provide it, in the form prescribed by the

Commission, within 14 days.

B. Disclosing, using, or benefitting from ct stomer information, including the name,

address, telephone number, email address, Social Security number, other identifying information,

or any data that enables access to a customer's a~count (including a credit card, bank account, or

other financial account), that any Defendant obtained prior to entry of this Order in connection

with job placement and resume repair services that are the subject matter of this case; and

C. Failing to destroy such customer information in all forms in their possession, custody, or

control within 30 days after receipt of written direction to do so from a representative of the

Commission.

Provided, however, that customer information need not be disposed of, and may be

disclosed, to the extent requested by a government agency or required by law, regulation, or

court order.

9


VIII. ORDER ACKNOWLEDGMENTS

IT IS FURTHER ORDERED that Defenjants obtain acknowledgments of receipt of this

Order:

A. Each Defendant, within 7 days of entry of this Order, must submit to the Commission an

acknowledgment of receipt of this Order sworn under penalty of perjury.

B. For 5 years after entry of this Order, the ndividual Defendant, for any business that

such Defendant, individually or collectively with any other Defendants, is the majority owner or

controls directly or indirectly, and each Corporate Defendant, must deliver a copy of this Order

to: ( 1) all principals, officers, directors, and LLC managers and members; (2) all employees

having managerial responsibilities for conduct related to the subject matter of the Order and all

agents and representatives who participate in conduct related to the subject matter of the Order;

and (3) any business entity resulting from any change in structure as set forth in the Section titled

Compliance Reporting. Delivery must occur wit1in 7 days of entry of this Order for current

personnel. For all others, delivery must occur before they assume their responsibilities.

C. From each individual or entity to which a Defendant delivered a copy of this Order, that

Defendant must obtain, within 30 days, a signed and dated acknowledgment of receipt of this

Order.

IX. COMPLIANCE REPORTING

IT IS FURTHER ORDERED that Defenfants make timely submissions to the

Commission:

A. One year after entry of this Order, each Defendant must submit a compliance report,

sworn under penalty of perjury:

10


1. Each Defendant must: (a) identi~, the primary physical, postal, and email address

and telephone number, as designated points of contact, which representatives of the Commission

may use to communicate with Defendant; (b) identify all of that Defendant's businesses by all of

their names, telephone numbers, and physical, p1)stal, email, and Internet addresses; (c) describe

the activities of each business, including the goods and services offered, the means of

advertising, marketing, and sales, and the involvement of any other Defendant (which the

Individual Defendant must describe if he knows or should know due to his own involvement);

(d) describe in detail whether and how that Defendant is in compliance with each Section of this

Order; and ( e) provide a copy of each Order Ad nowledgment obtained pursuant to this Order,

unless previously submitted to the Commission.

2. Additionally, the Individual Defendant must: (a) identify all telephone numbers

and all physical, postal, email and Internet addresses, including all residences; (b) identify all

business activities, including any business for which such Defendant performs services whether

as an employee or otherwise and any entity in w1ich such Defendant has any ownership interest;

and (c) describe in detail such Defendant's involvement in each such business, including title,

role, responsibilities, participation, authority, control, and any ownership.

B. For 15 years after entry of this Order, each Defendant must submit a compliance

notice, sworn under penalty of perjury, within 14 days of any change in the following:

1. Each Defendant must report any change in: (a) any designated point of contact; or

(b) the structure of any Corporate Defendant or any entity that Defendant has any ownership

interest in or controls directly or indirectly that may affect compliance obligations arising under

this Order, including: creation, merger, sale, or dissolution of the en_tity or any subsidiary, parent,

or affiliate that engages in any acts or practices rnbject to this Order.

11


2. Additionally, the Individual Defendant must report any change in: (a) name,

including aliases or fictitious name, or residence address; or (b) title or role in any business

activity, including any business for which such Defendant perfonns services whether as an

employee or otherwise and any entity in which such Defendant has any ownership interest, and

identify the name, physical address, and any Internet address of the business or entity.

C. Each Defendant must submit to the Comnission notice of the filing of any bankruptcy

petition, insolvency proceeding, or similar proceeding by or against such Defendant within 14

days of its filing.

D. Any submission to the Commission required by this Order to be sworn under penalty of

perjury must be true and accurate and comply w th 28 U.S.C. § 1746, such as by concluding: "I

declare under penalty of perjury under the laws of the United States of America that the

foregoing is true and correct. Executed on: ___ " and supplying the date, signatory's full

name. title (if applicable), and signature.

E. Unless otherwise directed by a Commiss.on representative in writing, all submissions to

the Commission pursuant to this Order must be emailed to [email protected] or sent by overnight

courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of

Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington,

DC 20580. The subject line must begin: FTC v. Worldwide Executive Job Search Solutions,

LLC, et. al., XI 90014.

X. RECORD KEEPING

IT IS FURTHER ORDERED that Defendants must create certain records for 15 years

after entry of the Order, and retain each such rec:xd for 5 years. Specifically, Corporate

Defendants and the Individual Defendant for any business that such Defendant, individually or

12


collectively with any other Defendants, is a majority owner or controls directly or indirectly,

must create and retain the following records:

A. Accounting records showing the revenues from all goods or services sold;

B. Personnel records showing, for each perrnn providing services, whether as an employee

or otherwise, that person's: name; addresses; telephone numbers; job title or position; dates of

service; and (if applicable) the reason for termimtion;

C. Records of all consumer complaints and refund requests, whether received directly or

indirectly, such as through a third party, and any response;

D. All records necessary to demonstrate full compliance with each provision of this Order,

including all submissions to the Commission; and

E. A copy of each unique advertisement or other marketing material.

XI. COMPLIAI\ CE MONITORING

IT IS FURTHER ORDERED that, for th~ purpose of monitoring Defendants' compliance

with this Order:

A. Within 14 days of receipt of a written rec uest from a representative of the Commission,

each Defendant must: submit additional compliance reports or other requested information,

which must be sworn under penalty of perjury; appear for depositions; and produce documents

for inspection and copying. The Commission is also authorized to obtain discovery, without

further leave of court, using any of the procedures prescribed by Federal Rules of Civil

Procedure 29, 30 (including telephonic depositicns), 31, 33, 34, 36, 45, and 69.

B. For matters concerning this Order, the Commission is authorized to communicate

directly with each Defendant. Defendant must permit representatives of the Commission to

13


interview any employee or other person affiliatd with any Defendant who has agreed to such an

interview. The person interviewed may have counsel present.

C. The Commission may use all other lawftl means, including posing, through its

representatives as consumers, suppliers, or other individuals or entities, to Defendants or any

individual or entity affiliated with Defendants, without the necessity of identification or prior

notice. Nothing in this Order limits the Commis:;ion's lawful use of compulsory process,

pursuant to Sections 9 and 20 of the FTC Act, ti U.S.C. §§ 49, 57b-l.

D. Upon written request from a representative of the Commission, any consumer reporting

agency must furnish consumer reports concerning Individual Defendant, pursuant to Section

604( I) of the Fair Credit Reporting Act, 15 U.S.C. § 1681 b(a)(I ).

XII. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Cl)urt retains jurisdiction of this matter for

purposes of construction, modification, and enforcement of this Order.

SO ORDERED this 2biay of tJ J,w-, , 2019.

T~~n~ Chief United States District Judge Southern District of Texas

14


SO STIPULATED AND AGREED:

FOR PLAINTIFF:

A1\" D. LEJFUNL Atturney in Charge Texas Bar # 24054286 S.D. lexas Bar# 764487 JA\fFS R. GOLDER Counsel TL'..\c,, Bar #08089520 Federal Trade Commission 199() Bryan Street, Suite 200 Dal Texas 75201 ale_)l"1me:a·1Jtc.gov jgok11.:r'11)ftc.gov Tclcph(me: (Le.Jeune) (214) 979-9371 Telephone: (Golder) (214) 979-9376 Fac-.imile: (214) 953-3079

FOR DEFENDANTS:

PHI .IP H. HILDER Statt.· Bar No. 09620050 SD ·r X No. 2474 STI PHANIE K. MCGUIRE Counsel State Bar No. I I 000520 SD X No. 437432 819 Lovett Blvd. Hou~ton. Texas 77006-3905 Tekphone: (7 I 3) 655-9111 Facsimile: (713)655-9112

l)f FF.ND ANTS: WORLDWIDE EXEC UT I\' E JOB SEARCH SOLtTIONS, LLC, PRIVATEEQUJTYHEADHUNTERS.COM, L._LLAND CRAIG NICHOLAS CHREST

.. (1 -~ .. ·/7 . . .. Crai~: Nicholas hre:;t. In ividually and as Ovvncr and Manc1ging Member of WorlJv,ide Lxccutive Joh Search Solutions. LLC and as owner and authorized agent of the Managing 1\-kmbcr of Private Equity! lcadhuntcn .com. LLC

15


SO STIPULATED AND AGREED:

FOR P, ,AINn~P ///4;-ff~

ANl'1(D. -tEJEUNE , Attorney in C,harge Texas Bar# 24054286 S.D. Texas Bar# 764487 JAMES R. GOLDER - Counsel Texas Bar #08089520 Federal Trade Commission 1999 Bryan Street, Suite 200 Dallas, Texas 75201 [email protected] [email protected] Telephone: (LeJeune) (214) 979-9371 Telephone: (Golder) (214) 979-9376 Facsimile: (214) 953-3079

DEFEND~TS:

~ State Bar No. 09620050 SD TX No. 2474 STEPHANIE K. MCGUIRE - Counsel State Bar No. 11000520 SD TX No. 437432 819 Lovett Blvd. Houston, Texas 77006-3905 Telephone: (713) 655-9111 Facsimile: (713) 655-9112

DEFENDANTS: WORLDWIDE EXECUTIVE JOB SEARCH SOLUTIONS, LLC, PRIV ATEEQUITYHEADHUNTERS.COM, LLC, AND CRAIG NICHOLAS CHREST

Craig Nicholas Chrest, Individually and as Owner and Managing Member of Worldwide Executive Job Search Solutions, LLC and as owner and authorized agent of the Managing Member of PrivateEquityHeadhunter~ .com, LLC

15

Case 4:19-cv-00495 Document 34 Filed on 10/07/19 in TXSD of 31Al/~HF"JTIC•\TFD9

lJ <; (~()Vlf<l'.,'I.\[ '.: I

INl-0R'v\,'\TIO:S.

CPO

Federal Trade Commission

PART 310-TELEMARKETING SALES RULE 16 CFR PART 310

Sec. 310.1 Scope of regulations in this part. 310.2 Definitions. 310.3 Deceptive telemarketing acts or prac

tices. 310.4 Abusive telemarketing acts or prac-

tices. 310.5 Recordkeeping requirements. 310.6 Exemptions. 310.7 Actions by states and private persons. 310.8 Fee for access to the National Do Not

Call Regis t,ry. 310.9 Severability.

ACTHORITY: 15 U.S.C. 6101····6108.

SOURCE: 75 FR 48516. Aug. 10. 2010, unless otherwise noted.

§310.2

§ 310.1 Scope of regulations in this part.

This part implements the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 6101-6108. as amended.

§ 310.2 Definitions. (a) Acquirer means a business organi

zation. financial institution, or an agent of a business organization or financial institution that has authority from an organization that operates or licenses a credit card system to authorize merchants to accept, transmit, or process payment JJy credit card through the credit card system for money. goods or services. or anything else of value.

s:n

Attach 11ent A


§310.2

<b) Attorney General means the chief legal officer of a state.

(c) Billing information means any data that enables any person to access a customer·s or donor's account, such as a credit card, checking, savings. share or similar account, utility bill. mortgage loan account, or debit card.

(dl Caller identification service means a service that allows a telephone subscriber to have the telephone number. and, where available, name of the calling party transmitted contemporaneously with the telephone call. and displayed on a device in or connected to the subscriber's telephone.

(e) Cardholder means a person to whom a credit card is issued or who is authorized to use a credit card on behalf of or in addition to the person to whom the credit card is issued.

<f) Cash-to-cash money transfer means the electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) transfer of the value of cash received from one person to another person in a different location that is sent by a money transfer provider and received in the form of cash. For purposes of this definition. money transfer provider means any person or financial institution that provides cash-to-cash money transfers for a person in the normal course of its business, whether or not the person holds an account with such person or financial institution. The term cash-to-cash money transfer includes a remittance transfer. as defined in section 919(g)(2) of the Electronic Fund Transfer Act (''EFTA''l, 15 U.S.C. 1693a, that is a cash-to-cash transaction; however it does not include any transaction that is;

<1) An electronic fund transfer as defined in section 903 of the EFT A;

(2) Covered by Regulation E, 12 CFR 1005.20, pertaining to gift cards: or

(3) Subject to the Truth in Lending Act. 15 U.S.C. 1601 et seq.

<gl Cash reload mechanism is a device. authorization code, personal identification number, or other security measure that makes it possible for a person to convert cash into an electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) form

16 CFR Ch. I (1-1-18 Edition)

that can be used to add funds to a general-use prepaid card, as defined in Regulation E, 12 CFR 1005.2, or an account with a payment intermediary. For purposes of this definition. a cash reload mechanism is not itself a general-use prepaid debit card or a swipe reload process or similar method in which funds are added directly onto a person's own general-use prepaid card or account with a payment intermediary.

(hl Charitable contribution means any donation or gift of money or any other thing of value.

(i) Commission means the Federal Trade Commission.

(jl Credit means the rig'l1t granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.

(kl Credit card means any card. plate, coupon book, or other credit device existing for the purpose of obtaining money. property. labor, or services on credit.

(l) Credit card sales draft means any record or evidence of a credit card transaction.

(m) Credit card system means any method or procedure used to process credit card transactions involving credit cards issued or licensed by the operator of that system.

(n) Customer means any person who is or may be required to pay for goods or services offered through telemarketing.

co) Debt relief service means any program or service represented, directly or by implication, to renegotiate. settle. or in any way alter the terms of payment or other terms of the debt between a person and one or more unsecured creditors or debt collectors. including, but not limited to. a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector.

(p) Donor means any person solicited to make a charitable contribution.

(q) Established business relationship means a relationship between a seller and a consumer based on:

O l the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the

Attach 'Tlent A



consumer and seller, within the eighteen (18) months immediately preceding the date of a telemarketing call; or

(2l the consumer's inquiry or application regarding a product or service offered by the seller. within the three (3)

months immediately preceding the date of a telemarketing call.

(rl Free-to-pay conversion means, in an offer or agreement to sell or provide any goods or services, a provision under which a customer receives a product or service for free for an initial period and will incur an obligation to pay for the product or service if he or she does not take affirmative action to cancel before the end of that period.

(s) Investment opportunity means anything, tangible or intangible. that is offered. offered for sale, sold, or traded based wholly or in part on representations. either express or implied. about past. present, or future income, profit, or appreciation.

(t) Material means likely to affect a person's choice of. or conduct regarding, goods or services or a charitable contribution.

(u) Merchant means a person who is authorized under a written contract with an acquirer to honor or accept credit cards. or to transmit or process for payment credit card payments, for the purchase of goods or services or a charitable contribution.

(V) Merchant agreement means a written contract between a merchant and an acquirer to honor or accept credit cards. or to transmit or process for payment credit card payments, for the purchase of goods or services or a charitable contribution.

(w) Negative option feature means, in an offer or agreement to sell or provide any goods or services, a provision under which the customer's silence or failure to take an affirmative action to reject goods or services or to cancel the agTeement is interpreted by the seller as acceptance of the offer.

(X) Out/Jound telephone call means a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution.

(YJ Person means any individual. group, unincorporated association, limited or general partnership, corporation, or other business entity.

§310.2

( z) ?reacquired account information means any information that enables a seller or telemarketer to cause a charge to be placed against a customer's or donor's account without obtaining the account number directly from the customer or donor during the telemarketing transaction pursuant to which the account will be charged.

(aa) Prize means anything offered. or purportedly offered. and given, or purportedly given. to a person by chance. For purposes of this definition, chance exists if a person is guaranteed to receive an item and, at the time of the offer or purported offer, the telemarketer does not identify the specific item that the person will receive.

(bbl Prize promotion means: (1) A sweepstakes or other game of

chance; or (2) An oral or written express or im

plied representation that a person has won, has been selected to receive. or may be eligible to receive a prize or purported prize.

(cc) Remotely created payment order means any payment instruction or order drawn on a person's account that is created by the payee or the payee·s agent and deposited into or cleared through the check clearing system. The term includes, without limitation, a ''remotely created check,·• as defined in Regulation CC, Availability of Funds and Collection of Checks, 12 CFR 229.2(fff), but does not include a payment order cleared through an Automated Clearinghouse (ACH) Network or subject to the Truth in Lending Act. 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR part 1026.

(dd) Seller means any person who, in connection with a telemarketing transaction, provides. offers to provide. or arranges for others to provide goods or services to the customer in exchange for consideration.

(ee) State means any state of the United States. the District of Columbia, Puerto Rico, the Northern Mariana Islands, and any territory or possession of the United States.

(ffl Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor.

(gg) Telemarketing means a plan, program, or campaign which is conducted

3~3

Attachment A


§310.3

to induce the purchase of goods or services or a charitable contribution. by use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog which: contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term "further solicitation•· does not include providing the customer with information about. or attempting to sell. any other item included in the same catalog which prompted the customer's call or in a substantially similar catalog.

(hh) Upselling means soliciting the purchase of goods or services following an initial transaction during a single telephone call. The upsell is a separate telemarketing transaction. not a continuation of the initial transaction. An '·external upsell'' is a solicitation made by or on behalf of a seller different from the seller in the initial transaction, regardless of whether the initial transaction and the subsequent solicitation are made by the same telemarketer. An "internal upsell'' is a solicitation made by or on behalf of the same seller as in the initial transaction. regardless of whether the initial transaction and subsequent solicitation are made by the same telemarketer.

[75 ~'H 48516. Aug. 10. 2010. as amended at 80 fi{ 77557. Dec. 14, 2015]

§ 310.3 Deceptive telemarketing acts or practices.

, a) Prohibited deceptive telemarketing acts or practices. It is a deceptive telemarketing act or practice and a violation of this Rule for any seller or telemarketer to engag·e in the following conduct:


(1) Before a customer consents to pay 659 for goods or services offered. failing to disclose truthfully, in a clear and conspicuous manner. the following material information:

(i) The total costs to purchase. receive. or use, and the quantity of. any g·oods or services that are the subject of the sales offer; ,>6o

(ii) All material restrictions. limitations, or conditions to purchase. receive. or use the goods or services that are the subject of the sales offer;

(iii) If the seller has a policy of not making· refunds, cancellations, exchanges, or repurchases, a statement informing the customer that this is the seller's policy; or, if the seller or telemarketer makes a representation about a refund. cancellation, exchange, or repurchase policy, a statement of all material terms and conditions of such policy;

(iv) In any prize promotion. the odds of being able to receive the prize, and, if the odds are not calculable in advance, the factors used in calculating the odds; that no purchase or payment is required to win a prize or to participate in a prize promotion and that any purchase or payment will not increase the person's chances of winning: and the no-purchase/no-payment method of participating in the prize promotion with either instructions on how to participate or an address or local or tollfree telephone number to which customers may write or call for information on how to participate:

"'" When a seller or telemarketer uses. or directs a customer to use, a courier to transport payment, the seller or telemarketer must make the disclosures required by §310.3(a)(ll before sending a courier to pick up payment or authorization for payment, or directing a customer to have a courier piek up payment or authorization for payment. In the case of debt relief services. the seller or telemarketer must make the disclosures required by §310.S(a)\l> before the consumer enrolls in an offered program.

660 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 ct seq., and Regulation Z. 12 CFH 226, compliance with the disclosure requirements under the Truth in Lending Act and Regulation Z shall constitute compliance with §310.3(a)(l)(i) of this Rule.

Attachment A



(Vl All material costs or conditions to receive or redeem a prize that is the subject of the prize promotion;

(vi) In the sale of any goods or services represented to protect, insure, or otherwise limit a customer's liability in the event of unauthorized use of the customer's credit card, the limits on a cardholder·s liability for unauthorized use of a credit card pursuant to 15 u.s.c. 1643:

(vii) If the offer includes a negative option feature, all material terms and conditions of the negative option feature, including. but not limited to, the fact that the customer's account will be charged unless the customer takes an affirmative action to avoid the charge(s). the date(sl the charge(sl will be submitted for payment, and the specific steps the customer must take to avoid the charge(s); and

(viii) In the sale of any debt relief service:

(Al the amount of time necessary to achieve the represented results, and to the extent that the service may include a settlement offer to any of the customer·s creditors or debt collectors, the time by which the debt relief service provider will make a bona fide settlement offer to each of them;

(B) to the extent that the service may include a settlement offer to any of the customer·s creditors or debt collectors, the amount of money or the percentage of each outstanding debt that the customer must accumulate before the debt relief service provider will make a bona fide settlement offer to each of them:

(Cl to the extent that any aspect of the debt relief service relies upon or results in the customer's failure to make timely payments to creditors or debt collectors. that the use of the debt relief service will likely adversely affect the customer's creditworthiness, may result in the customer being subject to collections or sued by creditors or debt collectors. and may increase the amount of money the customer owes due to the accrual of fees and interest; and

(D) to the extent that the debt relief service requests or requires the customer to place funds in an account at an insured financial institution, that the customer owns the funds held in

§310.3

the account, the customer may withdraw from the debt relief service at any time without penalty, and. if the customer withdraws, the customer must receive all funds in the account. other than funds earned by the debt relief service in compliance with § 310.4(a)(5)(i)(AJ through (Cl.

(2) Misrepresenting, directly or by implication, in the sale of goods or services any of the following material information:

(il The total costs to purchase, receive. or use, and the quantity of. any goods or services that are the subject of a sales offer:

(iil Any material restriction, limitation, or condition to purchase. receive, or use goods or services that are the subject of a sales offer;

(iii) Any material aspect of the performance, efficacy. nature, or central characteristics of goods or services that are the subject of a sales offer;

(iv) Any material aspect of the nature or terms of the seller's refund, cancellation, exchange, or repurchase policies;

(vJ Any material aspect of a prize promotion including, but not limited to, the odds of being able to receive a prize. the nature or value of a prize. or that a purchase or payment is required to win a prize or to participate in a prize promotion;

(vi) Any material aspect of an investment opportunity including, but not limited to. risk. liquidity, earnings potential, or profitability;

( viiJ A seller's or telemarketer·s affiliation with, or endorsement or sponsorship by, any person or government entity;

(viii) That any customer needs offered goods or services to provide protections a customer already has pursuant to 15 U.S.C. 1643;

(ixl Any material aspect of a negative option feature including. but not limited to, the fact that the customer·s account will be charged unless the customer takes an affirmative action to avoid the charge(sl, the date(s) the charge(s) will be submitted for payment, and the specific steps the customer must take to avoid the charge(s): or

Attachment A


§310.3

(x) Any material aspect of any debt relief service. including. but not limited to, the amount of money or the percentage of the debt amount that a customer may save by using such service: the amount of time necessary to achieve the represented results; the amount of money or the percentage of each outstanding debt that the customer must accumulate before the provider of the debt relief service will initiate attempts with the customer's creditors or debt collectors or make a bona fide offer to negotiate, settle. or modify the terms of the customer's debt: the effect of the service on a customer's creditworthiness; the effect of the service on collection efforts of the customer's creditors or debt collectors; the percentage or number of customers who attain the represented results; and whether a debt relief service is offered or provided by a non-profit entity.

(3l Causing billing information to be submitted for payment. or collecting· or attempting to collect payment for g·oods or services or a charitable contribution, directly or indirectly, without the customer's or donor's express verifiable authorization, except when the method of payment used is a credit card subject to protections of the Truth in Lending Act and Regulation Z, 6 'i1 or a debit card subject to the protections of the Electronic Fund Transfer Act and Regulation E.rm2 Such authorization shall be deemed verifiable if any of the following means is employed:

(il Express written authorization by the customer or donor, which includes the customer's or donor's signature:66'1

(ii) Express oral authorization which is audio-recorded and made available upon request to the customer or donor, and the customer·s or donor's bank or other billing entity. and which evidences clearly both the customer's or

hhl Truth in Lending Act, 15 U.S.C. 1601 et se11., and Regulation Z, 12 CFR part 226.

""' Electronic Fund Transfer Act, 15 U.S.C. 1693 el se,1., and Regulation E, 12 CFR part 205.

06" For purposes of this Rule. the term "sig·nature .. shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid sig·nature under applicable federal law or state contract law.


donor's authorization of payment for the goods or services or charitable contribution that are the subject of the telemarketing transaction and the customer's or donor's receipt of all of the following· information:

(A) An accurate description, clearly and conspicuously stated, of the goods or services or charitable contribution for which payment authorization is soug·ht;

(B) The number of debits. charges. or payments (if more than one);

(Cl The date(sJ the debit(s), charge(s), or payment(s) will be submitted for payment;

(D) The amount(s) of the debit(sJ, charge(s), or payment(s);

<E) The customer's or donor's name: (F) The customer·s or <lonor's billing

information, identified with sufficient specificity such that the customer or donor understands what account will be used to collect payment for the goods or services or charitable contribution that are the subject of the telemarketing transaction;

(G) A telephone number for customer or donor inquiry that is answered during normal business hours; and

(H) The date of the customer's or donor's oral authorization; or

(iii) Written confirmation of the transaction, identified in a clear and conspicuous manner as such on the outside of the envelope, sent to the customer or donor via first class mail prior to the submission for payment of the customer's or donor's billing information. and that includes all of the information contained in §§310.3(a)(3)(ii)(A)-(Gl and a clear and conspicuous statement of the procedures by which the customer or donor can obtain a refund from the seller or telemarketer or charitable organization in the event the confirmation is inaccurate; provided. however, that this means of authorization shall not be deemed verifiable in instances in which goods or services are offered in a transaction involving· a free-to-pay conversion and preacquired account information.

(4) Making a false or misleading statement to induce any person to pay for goods or services or to induce a charitable contribution.

Attach 11ent A



(b) Assisting and facilitating. It is a deceptive telemarketing act or practice and a violation of this Rule for a person to provide substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates §§310.3(a), (c) or (d), or § 310.4 of this Rule.

(C) Credit card laundering. Except as expressly permitted by the applicable credit card system, it is a deceptive telemarketing act or practice and a violation of this Rule for:

(1) A merchant to present to or deposit into. or cause another to present to or deposit into, the credit card system for payment. a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the carclholder and the merchant;

(2) Any person to employ, solicit, or otherwise cause a merchant. or an employee, representative, or agent of the merchant. to present to or deposit into the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing· credit card transaction between the cardholder and the merchant; or

(3) Any person to obtain access to the credit care! system through the use of a business relationship or an affiliation with a merchant. when such access is not authorized by the merchant agreement or the applicable credit card system.

(cl) Prohibited deceptive acts or practices in the solicitation of charitable contributions. It is a fraudulent charitable solicitation. a deceptive telemarketing act or practice, and a violation of this Rule for any telemarketer soliciting charitable contributions to misrepresent. directly or by implication. any of the following material information:

(1) The nature. purpose, or mission of any entity on behalf of which a charitable contribution is being requested;

(2) That any charitable contribution is tax deductible in whole or in part;

(3) The purpose for which any charitable contribution will be used;

(4) The percentag·e or amount of any charitable contribution that will go to

§310.4

a charitable organization or to any particular charitable program:

(5J Any material aspect of a prize promotion including, but not limited to: the odds of being able to receive a prize: the nature or value of a prize: or that a charitable contribution is required to win a prize or to participate in a prize promotion; or

(6) A charitable organization's or telemarketer's affiliation with, or endorsement or sponsorship by, any person or government entity.

[75 FR 48516. Aug. 10. 2010, as amended at 80 FR 77558. Dec. 11, 2015]

§ 310.4 Abusive telemarketing acts or practices.

(a) Abusive conduct generally. It is an abusive telemarketing act or practice and a violation of this Rule for any seller or telemarketer to engage in the following conduct:

(1) Threats, intimidation. or the use of profane or obscene language;

(2l Requesting or receiving payment of any fee or consideration for goods or services represented to remove derogatory information from, or improve, a person's credit history, credit record, or credit rating until:

(i) The time frame in which the seller has represented all of the goods or services will be provided to that person has expired; and

(ii) The seller has provided the person with documentation in the form of a consumer report from a consumer reporting agency demonstrating that the promised results have been achieved, such report having been issued more than six months after the results were achieved. Nothing in this Rule should be construed to affect the requirement in the Fair Credit Reporting Act, 15 U.S.C. 1681, that a consumer report may only be obtained for a specified permissible purpose;

(3) Requesting or receiving payment of any fee or consideration from a person for goods or services represented to recover or otherwise assist in the return of money or any other item of value paid for by. or promised to, that person in a previous transaction, until seven (7) business clays after such money or other item is delivered to that person. This provision shall not

Attachment A


§310.4

apply to goods or services provided to a person by a licensed attorney;

(4) Requesting or receiving payment of any fee or consideration in advance of obtaining a loan or other extension of credit when the seller or telemarketer has guaranteed or represented a high likelihood of success in obtaining or arranging a loan or other extension of credit for a person:

(5)(il Requesting or receiving payment of any fee or consideration for any debt relief service until and unless:

(A) The seller or telemarketer has renegotiated. settled, reduced. or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt management plan, or other such valid contractual agreement executed by the customer;

(B) The customer has made at least one payment pursuant to that settlement agreement. debt management plan. or other valid contractual agreement between the customer and the creditor or debt collector: and

(C) To the extent that debts enrolled in a service are renegotiated, settled, reduced, or otherwise altered individually, the fee or consideration either:

(7) Bears the same proportional relationship to the total fee for renegotiating, settling, reducing·, or altering the terms of the entire debt balance as the individual debt amount bears to the entire debt amount. The individual debt amount and the entire debt amount are those owed at the time the debt was enrolled in the service; or

(2) Is a percentage of the amount saved as a result of the renegotiation, settlement. reduction, or alteration. The percentage charged cannot change from one individual debt to another. The amount saved is the difference between the amount owed at the time the debt was enrolled in the service and the amount actually paid to satisfy the debt.

(ii) Nothing in §310.4(a)(5)(i) prohibits requesting or requiring the customer to place funds in an account to be used for the debt relief provider's fees and for payments to creditors or debt collectors in connection with the renegotiation, settlement, reduction, or other alteration of the terms of payment or other terms of a debt. provided that:


(A) The funds are held in an account at an insured financial institution:

(Bl The customer owns the funds held in the account and is paid accrued interest on the account, if any;

(C) The entity administering the account is not owned or controlled by, or in any way affiliated with. the debt relief service:

( D) The entity administering the account does not give or accept any money or other compensation in exchange for referrals of business involving· the debt relief service; and

(E) The customer may withdraw from the debt relief service at any time without penalty, and must receive all funds in the account. other than funds earned by the debt relief service in compliance with §310.4(al(5J(il(A) through (Cl, within seven (7) business days of the customer's request.

<6) Disclosing or receiving, for consideration, unencrypted consumer account numbers for use in telemarketing; provided. however, that this paragraph shall not apply to the disclosure or receipt of a customer's or donor's billing information to process a payment for goods or services or a charitable contribution pursuant to a transaction;

(7) Causing billing information to be submitted for payment, directly or indirectly, without the express informed consent of the customer or donor. In any telemarketing transaction, the seller or telemarketer must obtain the express informed consent of the customer or donor to be charged for the goods or services or charitable contribution and to be charged using the identified account. In any telemarketing transaction involving preacquired account information. the requirements in paragraphs (a)(7l(i) through (ii) of this section must be met to evidence express informed consent.

( i) In any telemarketing transaction involving preacquired account information and a free-to-pay conversion feature. the seller or telemarketer must:

(A) Obtain from the customer, at a minimum, the last four (4) digits of the account number to be charged;

<Bl Obtain from the customer his or her express agreement to be charged for the goods or services and to be

338

Attachment A



charged using the account number pursuant to paragraph (al(7)(i)(Al of this section; and,

(C) Make and maintain an audio recording of the entire telemarketing transaction.

(ii l In any other telemarketing transaction involving preacquired account information not described in paragraph ( aJ(7l(iJ of this section. the seller or telemarketer must:

IA) At a minimum, identify the account to be charged with sufficient specificity for the customer or donor to understand what account will be charged; and

(Bl Obtain from the customer or donor his or her express agreement to be charged for the goods or services and to be charged using the account number identified pursuant to paragraph (a)(7)(ii)(A) of this section:

(8) Failing to transmit or cause to be transmitted the telephone number. and, when made available by the telemarketer's carrier, the name of the telemarketer, to any caller identification service in use by a recipient of a telemarketing call; provided that it shall not be a violation to substitute (for the name and phone number used in, or billed for. making the call) the name of the seller or charitable organization on behalf of which a telemarketing call is placed, and the seller's or charitable organization's customer or donor service telephone number. which is answered during· regular business hours;

(9) Creating or causing to be created. directly or indirectly, a remotely created payment order as payment for goods or services offered or sold through telemarketing or as a charitable contribution solicited or sought through telemarketing; or

(10) Accepting from a customer or donor. directly or indirectly, a cash-tocash money transfer or cash reload mechanism as payment for goods or services offered or sold through telemarketing or as a charitable contribution solicited or soug-ht through telemarketing.

(bl Pattern of calls. (1) It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in, or for a seller

§310.4

to cause a telemarketer to engage in. the following conduct:

(i) Causing any telephone to ring, or engaging any person in telephone conversation, repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number:

(ii) Denying or interfering in any way, directly or indirectly. with a person's right to be placed on any registry of names and/or telephone numbers of persons who do not wish to receive outbound telephone calls established to comply with paragraph (b)(l)(iii)(A) of this section, including. but not limited to, harassing any person who makes such a request; hanging up on that person; failing to honor the request: requiring the person to listen to a sales pitch before accepting the request: assessing a charge or fee for honoring the request; requiring a person to call a different number to submit the request: and requiring the person to identify the seller making the call or on whose behalf the call is made:

(iii) Initiating any outbound telephone call to a person when:

(A) That person previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being· offered or made on behalf of the charitable organization for which a charitable contribution is being solicited; or

(B) That person's telephone number is on the "do-not-call'' registry, maintained by the Commission. of persons who do not wish to receive outbound telephone calls to induce the purchase of goods or services unless the seller or telemarketer:

(1) Can demonstrate that the seller has obtained the express agreement. in writing, of such person to place calls to that person. Such written agreement shall clearly evidence such person ·s authorization that calls made by or on behalf of a specific party may be placed to that person, and shall include the telephone number to which the calls may be placed and the signature 664 of that person; or

6fl4 For purposes of this Rule. the term "signature" shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a

Cuntrnu<!d

3H9

Attachment A


§310.4

(2) Can demonstrate that the seller has an established business relationship with such person, and that person has not stated that he or she does not wish to receive outbound telephone calls under paragraph (b)(l)(iii)(A) of this section: or

(iv) Abandoning any outbound telephone call. An outbound telephone call is ''abandoned'' under this section if a person answers it and the telemarketer does not connect the call to a sales representative within two (2) seconds of the person's completed greeting.

(v) Initiating any outbound telephone call that delivers a prerecorded message, other than a prerecorded message permitted for compliance with the call abandonment safe harbor in §310.4(b)(4)(iii), unless:

(A) In any such call to induce the purchase of any good or service, the seller has obtained from the recipient of the call an express agreement, in writing, that:

(i) The seller obtained only after a clear and conspicuous disclosure that the purpose of the agreement is to authorize the seller to place prerecorded calls to such person;

(iiJ The seller obtained without requiring, directly or indirectly. that the agreement be executed as a condition of purchasing any good or service;

(iii) Evidences the willingness of the recipient of the call to receive calls that deliver prerecorded messages by or on behalf of a specific seller; and

(iv) Includes such person's telephone number and signature:665 and

(BJ In any such call to induce the purchase of any good or service, or to induce a charitable contribution from a member of, or previous donor to. a nonprofit charitable organization on whose behalf the call is made, the seller or telemarketer:

<i) Allows the telephone to ring for at least fifteen <15) seconds or four (4) rings before disconnecting an unanswered call; and

valid signature under applicable federal Jaw or state contract Jaw.

,,15 For purposes of this Rule. the term "signature" shall inclucle an electronic or cligital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law.


(ii) Within two <2) seconds after the completed greeting of the person called, plays a prerecorded message that promptly provides the disclosures required by § 310.4(dl or (eJ. followed immediately by a disclosure of one or both of the following:

(A) In the case of a call that could be answered in person by a consumer, that the person called can use an automated interactive voice and/or keypress-activated opt-out mechanism to assert a Do Not Call request pursuant to §310.4(b)(l)(iii)(A) at any time during the message. The mechanism must:

O) Automatically add the number called to the seller's entity-specific Do Not Call list;

(2) Once invoked, immediately disconnect the call; and

(3) Be available for use at any time during the message; and

(B) In the case of a call that could be answered by an answering machine or voicemail service, that the person called can use a toll-free telephone number to assert a Do Not Call request pursuant to § 310.4<bl(l)(iii)(A). The number provided must connect directly to an automated interactive voice or keypress-activated opt-out mechanism that:

Ol Automatically adds the number called to the seller's entity-specific Do Not Call list:

(2) Immediately thereafter disconnects the call; and

(3) Is accessible at any time throughout the duration of the telemarketing campaign: and

(iii) Complies with all other requirements of this part and other applicable federal and state laws.

(CJ Any call that complies with all applicable requirements of this paragraph (v) shall not be deemed to violate § 310.4(b)(l)(iv) of this part.

(DJ This paragraph (V) shall not apply to any outbound telephone call that delivers a prerecorded healthcare message made by. or on behalf of, a covered entity or its business associate. as those terms are defined in the HIP AA Privacy Rule, 45 CFR 160.103.

(2) It is an abusive telemarketing act or practice and a violation of this Rule for any person to sell, rent. lease, purchase, or use any list established to comply with §310.4(b)(l)(iiiHAl, or

390

Attach 11ent A



maintained by the Commission pursuant to §310.4(b)(l)(iii)(B). f'or any purpose except compliance with the provisions of this Rule or otherwise to prevent telephone calls to telephone numbers on such lists.

(3) A seller or telemarketer will not be liable for violating § 310.4(b )( l)(ii) and (iii) if it can demonstrate that, as part of the seller·s or telemarketer's routine business practice:

(i) It has established and implemented written procedures to comply with §310.4(b)(l)(ii) and (iiiJ;

(ii) It has trained its personnel, and any entity assisting in its compliance. in the procedures established pursuant to §310.4(b)(3J(i);

(iii) The seller. or a telemarketer or another person acting on behalf of the seller or charitable organization. has maintained and recorded a list of telephone numbers the seller or charitable organization may not contact, in compliance with §310.4(bJ(l)(iii)(A);

<iv) The seller or a telemarketer uses a process to prevent telemarketing to any telephone number on any list established pursuant to §310.4(b)(3)(iii) or 310.4(b)(l)(iii)(B), employing a version of the "do-not-call'" registry obtained from the Commission no more than thirty-one (31) days prior to the elate any call is made. and maintains records documenting this process;

(V) The seller or a telemarketer or another person acting on behalf of the seller or charitable organization, monitors and enforces compliance with the procedures established pursuant to § 310.4(b)(3)(i): and

(Vil Any subsequent call otherwise violating paragraph (b)(lJ(ii) or (iii) of this section is the result of error and not of failure to obtain any information necessary to comply with a request pursuant to paragraph (b)(lJ(iii)(A) of this section not to receive further calls by or on behalf of a seller or charitable organization.

(4) A seller or telemarketer will not be liable for violating §310.4(b)(l)(iv) if:

Ci) The seller or telemarketer employs technology that ensures abandonment of no more than three (3) percent of all calls answered by a person, measured over the duration of a sing·le calling campaign. if less than 30 days, or separately over each successive 30-

§310.4

day period or portion thereof that the campaign continues.

(ii) The seller or telemarketer. for each telemarketing call placed, allows the telephone to ring for at least fifteen ( 15) seconds or four ( 4) rings before disconnecting an unanswered call;

(iii) Whenever a sales representative is not available to speak with the person answering the call within two (2J seconds af'ter the person's completed greeting, the seller or telemarketer promptly plays a recorded messag·e that states the name and telephone number of the seller on whose behalf the call was placed666: and

(iv) The seller or telemarketer. in accordance with § 310.5(b)-(d). retains records establishing compliance with § 310.4(b)(4)(i)-(iii).

(cl Calling time restrictions. Without the prior consent of a person, it is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in outbound telephone calls to a person·s residence at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called person's location.

(cl) Required oral disclosures in the sale of goods or services. It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer in an outbound telephone call or internal or external upsell to induce the purchase of goods or services to fail to disclose truthfully, promptly. and in a clear and conspicuous manner to the person receiving the call, the following information:

rl) The identity of the seller: (2l That the purpose of the call is to

sell goods or services: (3) The nature of the goods or serv

ices; and (4) That no purchase or payment is

necessary to be able to win a prize or participate in a prize promotion if a prize promotion is offered and that any purchase or payment will not increase the person·s chances of winning. This disclosure must be made before or in conjunction with the description of the prize to the person called. If requested

66fi This provision does not affect any seller's or telemarketer's obligation to comply with relevant state and federal laws, including but not limited to the 'l'CPA, 47 U.S.C. 227, and 47 CFR part 64.1200.

Attachment A


§310.5

by that person, the telemarketer must disclose the no-purchaseino-payment entry method for the prize promotion; provided. however. that. in any internal upsell for the sale of g·oods or services, the seller or telemarketer must provide the disclosures listed in this section only to the extent that the information in the upsell differs from the disclosures provided in the initial telemarketing transaction.

(e) Required oral disclosures in charitable solicitations. It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer. in an outbound telephone call to induce a charitable contribution, to fail to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the call, the following information:

(ll The identity of the charitable organization on behalf of which the request is being made: and

(2) That the purpose of the call is to solicit a charitable contribution.

[75 F'R 48516. Aug. 10. 2010. as amended at 76 FR 58716. Sept. 22. 2011; 80 FR 77559. Dec. 11, 2015]

§ 310.5 Recordkeeping requirements. (a) Any seller or telemarketer shall

keep, for a period of 24 months from the date the record is produced, the following records relating to its telemarketing activities:

(1 l All substantially different adver-tising, brochures, telemarketing scripts, and promotional materials;

(2) The name and last known addreRs of each prize recipient and the prize awarded for prizes that are represented, directly or by implication, to have a value of $25.00 or more;

(3J The name and last known address of each customer, the goods or services purchased, the elate such goods or services were shipped or provided. and the amount paid by the customer for the goods or services;667

(4) The name, any fictitious name used, the last known home address and

067 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR 226. compliance with the recorctkeeping requirements under the Truth in Lending Act, and Regulation Z, shall constitute compliance with § 310.5(a)(3) of this Rule.


telephone number, and the job title(sl for all current and former employees directly involved in telephone sales or solicitations; provided, however. that if the seller or telemarketer permits fictitious names to be used by employees. each fictitious name must be traceable to only one specific employee; and

(5) All verifiable authorizations or records of express informed consent or express agreement required to be provided or received under this Rule.

(b) A seller or telemarketer may keep the records required by §310.5(aJ in any form, and in the same manner, format, or place as they keep such records in the ordinary course of business. Failure to keep all records required by § 310.5(a) shall be a violation of this Rule.

(c) The seller and the telemarketer calling on behalf of the seller may, by written agreement. allocate responsibility between themselves for the recorclkeeping required by this Section. When a seller and telemarketer have entered into such an agreement. the terms of that agreement shall govern, and the seller or telemarketer, as the case may be, need not keep records that duplicate those of the other. If the agreement is unclear as to who must maintain any required record(s), or if no such agreement exists. the seller shall be responsible for complying with §§310.5(a)(l)-(3) and (5); the telemarketer shall be responsible for complying with §310.5(a)(4).

(ell In the event of any dissolution or termination of the seller·s or telemarketer's business. the principal of that seller or telemarketer shall maintain all records as required under this section. In the event of any sale. assignment, or other change in ownership of the seller's or telemarketer·s business. the successor business shall maintain all records required under this section.

§ 310.6 Exemptions.

(a) Solicitations to induce charitable contributions via outbound telephone calls are not covered by §310.4(b)(l)(iii)(Bl of this Rule.

(bJ The following acts or practices are exempt from this Rule:

3!12

Attachment A



(1) The sale of pay-per-call services subject to the Commission's Rule entitled "Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992,'' 16 CFR part 308, provided. however, that this exemption does not apply to the requirements of §§310.4(a)(ll, (a)(7J, (bl, and (c):

(2) The sale of franchises subject to the Commission·s Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising·,., ( "Franchise Rule" l 16 CFR part 436. and the sale of business opportunities subject to the Commission's Rule entitled ''Disclosure Requirements and Prohibitions Concerning Business Opportunities," ( ·'Business Opportunity Rule'') 16 CFR part 437, provided, however, that this exemption does not apply to the requirements of §§310.4(a)(l). (a)(7). (bl, and Cc);

(3) Telephone calls in which the sale of goods or services or charitable solicitation is not completed, and payment or authorization of payment is not required. until after a face-to-face sales or donation presentation by the seller or charitable organization, provided, however. that this exemption does not apply to the requirements of §§310.4(aJ(l), (a)(7). (b), and (c);

(4! Telephone calls initiated by a customer or cloner that are not the result of any solicitation by a seller. charitable organization, or telemarketer, provided, however, that this exemption does not apply to any instances of upselling included in such telephone calls:

(5) Telephone calls initiated by a customer or donor in response to an advertisement through any medium, other than direct mail solicitation. provided, however. that this exemption does not apply to:

Ci) Calls initiated by a customer or donor in response to an advertisement relating to investment opportunities, debt relief services. business opportunities other than business arrangements covered by the Franchise Rule or Business Opportunity Rule, or advertisements involving offers for goods or services described in § 310.3(a )(l)(viJ or §310.4(a)(2) through (4);

(ii) The requirements of §310.4(a)(9) or (10); or

§310.7

(iii) Any instances of upselling included in such telephone calls;

(6) Telephone calls initiated by a customer or donor in response to a direct mail solicitation. including solicitations via the U.S. Postal Service, facsimile transmission, electronic mail. and other similar methods of deliverv in which a solicitation is directed t~ specific address(es) or person(sl, that clearly, conspicuously, and truthfully discloses all material information listed in § 310.3( a)(l ), for any goods or services offered in the direct mail solicitation. and that contains no material misrepresentation regarding any item contained in §310.3(dJ for any requested charitable contribution; provided, however. that this exemption does not apply to:

(i) Calls initiated by a customer in response to a direct mail solicitation relating to prize promotions. investment opportunities. debt relief services. business opportunities other than business arrangements covered by the Franchise Rule or Business Opportunity Rule, or goods or services described in § 310.3(aHl)(vi) or § 310.4(a)(2) through (4);

(ii) The requirements of § 310.4(a)(9) or (10): or

(iii) Any instances of upselling included in such telephone calls; and

(7) Telephone calls between a telemarketer and any business to induce the purchase of goods or services or a charitable contribution by the business, except calls to induce the retail sale of nondurable office or cleaning supplies; provided, however, that §§ 310.4(bJ(l)(iiil(B) and 310.5 shall not apply to sellers or telemarketers of nondurable office or cleaning supplies.

(75 FR 48516. Aug. 10. 2010, as amended at 80 FR 77559, Dec. 14, 2015]

§ 310. 7 Actions by states and private persons.

(a) Any attorney general or other officer of a state authorized by the state to bring an action under the Telemarketing and Consumer Fraud and Abuse Prevention Act. and any private person who brings an action under that Act. shall serve written notice of its action on the Commission, if feasible. prior to its initiating an action under this Rule. The notice shall be sent to

Attachment A


§310.8

the Office of the Director. Bureau of Consumer Protection. Federal Trade Commission. Washington, DC 20580, and shall include a copy of the state's or private person ·s complaint and any other pleadings to be filed with the court. If prior notice is not feasible, the state or private person shall serve the Commission with the required notice immediately upon instituting its action.

(b) Nothing contained in this Section shall prohibit any attorney general or other authorized state official from proceeding in state court on the basis of an alleged violation of any civil or criminal statute of such state.

§ 310.8 Fee for access to the National Do Not Call Registry.

(a) It is a violation of this Rule for any seller to initiate, or cause any telemarketer to initiate, an outbound telephone call to any person whose telephone number is within a given area code unless such seller, either directly or through another person, first has paid the annual fee, required by §310.B(c), for access to telephone numbers within that area code that are included in the National Do Not Call Registry maintained by the Commission under §310.4(b)O)(iii)(B): provided. however. that such payment is not necessary if the seller initiates, or causes a telemarketer to initiate, calls solely to persons pursuant to §§310.4(b)(l)(iiiHB)(i) or (ii), and the seller does not access the National Do Not Call Registry for any other purpose.

(b) It is a violation of this Rule for any telemarketer, on behalf of any seller, to initiate an outbound telephone call to any person whose telephone number is within a given area code unless that seller, either directly or through another person, first has paid the annual fee. required by §310.B(c). for access to the telephone numbers within that area code that are included in the National Do Not Call Registry; provided, however. that such payment is not necessary if the seller initiates, or causes a telemarketer to initiate, calls solely to persons pursuant to §§310.4(b)(l)(iii)(B)(i) or (ii). and the seller does not access the National Do


Not Call Reg·istry for any other purpose.

(c) The annual fee, which must be paid by any person prior to obtaining access to the National Do Not Call Registry, is $62 for each area code of data accessed. up to a maximum of $17.021; provided, however, that there shall be no charg·e to any person for accessing the first five area codes of data. and provided further, that there shall be no charge to any person engaging in or causing others to engage in outbound telephone calls to consumers and who is accessing area codes of data in the National Do Not Call Registry if the person is permitted to access, but is not required to access, the National Do Not Call Reg'istry under this Rule, 47 CFR 64.1200, or any other Federal regulation or law. No person may participate in any arrangement to share the cost of accessing the National Do Not Call Registry, including any arrangement with any telemarketer or service provider to divide the costs to access the registry among various clients of that telemarketer or service provider.

(d) Each person who pays, either directly or through another person. the annual fee set forth in paragraph (c) of this section, each person excepted under paragraph (c) from paying the annual fee. and each person excepted from paying an annual fee under §310.4(b)(l)(iii)(B), will be provided a unique account number that will allow that person to access the registry data for the selected area codes at any time for the twelve month period beginning on the first day of the month in which the person paid the fee ("the annual period''). To obtain access to additional area codes of data during the first six months of the annual period. each person required to pay the fee under paragraph (CJ of this section must first pay $62 for each additional area code of data not initially selected. To obtain access to additional area codes of data during the second six months of the annual period, each person required to pay the fee under paragraph (c) of this section must first pay $31 for each additional area code of data not initially selected. The payment of the additional fee will permit the person to access the additional area codes of data for the remainder of the annual period.

394

Attach 11ent A



(e) Access to the National Do Not Call Registry is limited to telemarketers, sellers, others engaged in or causing others to engage in telephone calls to consumers. service providers acting on behalf of such persons, and any government agency that has law enforcement authority. Prior to accessing the National Do Not Call Registry, a person must provide the identifying information required by the operator of the registry to collect the fee, and must certify, under penalty of law. that the person is accessing the registry solely to comply with the provisions of this Rule or to otherwise prevent telephone calls to telephone numbers on the registry. If the person is accessing the registry on behalf of sellers, that person also must identify each of the sellers on whose behalf it is accessing the registry, must provide each seller's unique account number for access to the national registry, and must certify. under penalty of law, that the sellers will be using the information gathered from the registry solely to comply with the provisions of this Rule or otherwise to prevent telephone calls to telephone numbers on the registry.

[75 FR 18516. Aug. 10. 2010; 75 FR 51931, Aug. 24, 2010. as amended at 77 FR 51697, Aug-. 27, 2012: 78 FR 53643, Aug. 30, 2013; 79 FR 51478. Aug. 29, 2014; 80 FR 77560. Dec. 14, 2016; 81 FR 59845, Aug. 31, 2016; 82 FR 39534. Aug-. 21, 2017]

§ 310.9 Severability.

The provisions of this Rule are separate and severable from one another. If any provision is stayed or determined to be invalid. it is the Commission's intention that the remaining provisions shall continue in effect.

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Attach 11ent A

§311.4

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